BI to Enforce Stringent Monetary Policy

TEMPO.CO, Jakarta - Bank Indonesia (BI) will implement a stringent monetary policy until the end of 2014 to achieve the inflation target, improve the current account deficit, and anticipate the impact of the global economic policy.

"In general, until the end of this year, we can manage the situation," stated Bank Indonesia Governor Agus Martowardojo as quoted by Antara News.

On Thursday, September 11, the Board of Governors of Bank Indonesia decided to maintain BI's benchmark interest rate (BI Rate) at 7.5 percent for the last eleven months.

BI also decided to implement an interest rate on lending and deposit facilities respectively at 7.5 percent and 5.75 percent.

BI explained that there were several external and domestic risks that can interfere in achieving the inflation target and improving the current account deficit.

"So, the main thing is that we have to strongly prepare the Indonesian economy and prioritize the management of funds that may outflow to the United States when the Fed funds rate inclines," he emphasized.

Therefore, BI will continue to strengthen the monetary, macro-prudential, and the domestic economy.

"BI will prepare a policy that lays emphasis on macro-prudential aspects. We hope that macro-prudential aspects will strengthen our macro economy when the Fed funds rate inclines," he noted.

Agus stated that BI will also improve coordination with the government in implementing policies to control inflation and the current account deficit to ensure that the economic adjustment process can run smoothly.

ANTARA